Which describes the difference between secured and unsecured credit? Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object. Unsecured credit is backed by an asset equal to the value of a loan, while secured credit is not guaranteed by a material object. Secured credit is risky because banks cannot seize assets, while unsecured credit is less risky because it is backed by material objects. Unsecured credit enables lenders to seize an asset if a loan is not paid, while secured credit prohibits lenders from taking material objects.
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When entities like companies take loans, some of the loans are secured while others are not. Secured loans are those loans which are backed by some material objects possessedd by the company and have preferential treatment. In case the borrower, the company, goes bankrupt, secured loans are to be paid before paying the unsecured loans. In other words, secured loans have the right to claim their money back before any other type of loan is paid back. Thus secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.
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Answer: It's A on Edgenuity.
A. Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.
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